Agriculture, Chinese development, and the macroeconomy

In my dissertation, I examine the role of agriculture and structural change in China's economic growth during the reform periods after 1978. I develop and calibrate a two-sector general equilibrium model that combines non-homothetic preferences and sectoral differences in productivity growth. Of these two economic forces, the former guarantees that the reallocation of labor from agriculture to the rest of the economy is a gradual process. The speed of such reallocation depends primarily on the differences in productivity growth. I also estimate the Total Factor Productivity (TFP) growth of agriculture in China using micro-level farm data. I show that the labor input of Chinese agriculture decreased at a rate of 2% annually from 1978 to 2003 and that the TFP growth of agriculture was 5.4% during that period. This confirms the common belief that the efficiency gain of the Chinese economy during the reform periods lies mainly in agriculture.